Downtown Red Bank – Photo by Aaron Houston for Real Estate NJ
We assembled a panel of industry experts to tackle this month’s question.
Here’s what they had to say.
Vic Carstarphen, mayor, city of Camden
New Jersey’s cities face significant challenges coming out of the COVID-19 pandemic, perhaps most notably because of the increased expectation that workers will be able to work from home instead of returning to urban cores. If workers do not return, the many local businesses they support will struggle to survive. While Camden has seen an influx of major employers establishing roots in recent years — many of which will have their employees return to the office under the terms of their tax incentive programs — it is vitally important for leaders to rethink how and for whom cities are providing services. It is critical that cities either become or remain places that are growing and vibrant. That means every community and every neighborhood is brought along and there are opportunities for every resident. There is no doubt that when communities are vibrant, diverse and offer real opportunity, people will want to live, work and visit them. We are fortunate that many of our largest employers have not only committed to bringing their employees back to Camden but also committed to supporting neighborhoods throughout the city, not just on the waterfront.
Clark Machemer, senior managing director, Crow Holdings Industrial (Montclair)
Pre-pandemic, municipalities were feeling a cash crunch as office and retail properties that generated significant tax revenue were suffering. The economic toll of the pandemic has only exacerbated this, making maximizing property taxes a priority.
At the same time, there can be tension between boosting tax revenue and other concerns. For example, single-family homes are one of the most successful real estate asset classes, yet many towns are wary about new homebuilding. Ultimately, it’s essential for all stakeholders to realize that the economy is changing. Local leaders willing to adapt will see their towns thrive in 2025 and 2030.
As it pertains to retail, it’s key to realize that the sector has evolved and food and beverage has become the true lifeblood of most downtowns. Expanding liquor licenses and finding other ways to support local restaurants will ensure the continued vibrancy of our municipalities in the years ahead.
Sean R. McGowan, partner, real estate and redevelopment and land use departments, Greenbaum Rowe Smith & Davis LLP (Roseland)
The pandemic accelerated trends that were already taking hold, including flexible work schedules allowing employees to work remotely. With the pandemic waning and many employees eager to spend time in the office again, some businesses will nonetheless continue to allow greater flexibility, which in turn will result in lower demand for office space, especially where remote work has allowed workers to relocate while still working for New Jersey-based companies. The impact on small retail businesses and restaurants that serve commuters has not been fully realized, in part due to the injection of capital from the CARES Act and Paycheck Protection Program loans. While those businesses will undoubtedly see an uptick as workers return, full recovery will be a challenge for many, especially in downtown locations. On the flip side, the increased presence of multifamily housing in those areas will hopefully offset the financial losses from reduced commuter traffic.
Chris J. Murphy, partner, Murphy Schiller & Wilkes LLP (Newark)
While the COVID-19 pandemic has impacted most municipalities, cities throughout the state have done a good job at weathering the storm. This does not mean that there won’t be certain challenges coming out of the pandemic. In some cases, employees are hesitant to return to the office — due to a fear of COVID-19 or the fact that they have adapted to working from home and would like to avoid a lengthy commute. As companies look to be more flexible on this front, it could have a devastating impact on cities, as daily commuters and office workers help fuel the local economy. While there may be some contraction in the urban office market due to remote or hybrid work models, we believe that New Jersey’s cities will come roaring back in the second half of 2021, as more employees return to the office. We believe that this will lead to vibrancy and an energy that will attract even more new residents and businesses back to New Jersey’s amazing cities.